EXHIBIT 10.106
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
INSIGNIA SOLUTIONS PLC
JEODE INC.
DOLLARDAYS INTERNATIONAL, INC.
AND
THE REPRESENTATIVE OF THE HOLDERS OF ALL OF
THE
CAPITAL STOCK OF DOLLARDAYS INTERNATIONAL,
INC.
DATED AS OF JUNE 23, 2008
TABLE OF CONTENTS
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Page
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SECTION
1.
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The
Merger.
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1
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1.1.
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The
Merger
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1
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1.2.
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Effective
Time; Closing
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2
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1.3.
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Effect
of the Merger
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2
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1.4.
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Certificate
of Incorporation; Bylaws; Corporate Records.
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2
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1.5.
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Directors
and Officers
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2
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1.6.
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Appointment
of Representative; Agreements Binding on Company
Securityholders
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2
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SECTION
2.
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Definitions;
Conversion and Exchange of Securities.
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3
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2.1.
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Certain
Definitions
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3
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2.2.
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Effect
on Capital Stock
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4
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2.3.
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Dissenting
Holders.
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5
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2.4.
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Options
and Warrants
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5
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2.5.
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Surrender
of Certificates.
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6
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2.6.
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Further
Action
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7
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2.7.
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Legends
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7
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SECTION
3.
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Representations
and Warranties of the Company
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8
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3.1.
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Organization
and Standing.
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8
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3.2.
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Capitalization
and Ownership of Shares
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8
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3.3.
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Subsidiaries
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9
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3.4.
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Authority
for Agreement.
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9
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3.5.
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Consents
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9
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3.6.
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Financial
Statements; Liabilities
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10
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3.7.
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Absence
of Changes
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10
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3.8.
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Taxes
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11
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3.9.
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Property
and Sufficiency.
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12
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3.10.
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Contracts
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12
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3.11.
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Benefit
Plans.
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14
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3.12.
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Intellectual
Property.
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15
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3.13.
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Accounts
Receivable
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17
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3.14.
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Government
Funding
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17
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3.15.
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Insurance
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17
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3.16.
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Personnel.
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17
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3.17.
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Litigation
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18
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3.18.
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Environmental
Matters
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18
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3.19.
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Compliance
with Instruments; Laws; Governmental
Authorizations.
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18
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3.20.
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Banking
Relationships
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19
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3.21.
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Books
and Records
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19
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3.22.
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Brokers
and Finders; Existing Discussions
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19
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3.23.
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Vote
Required; Notices
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19
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3.24.
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Anti-Takeover
Statute Not Applicable
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20
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3.25.
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Certain
Relationships and Related Transactions
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20
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3.26.
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Disclosures
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20
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SECTION
4.
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Representations
and Warranties by Parent and Merger Sub
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20
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4.1.
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Organization
and Standing
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20
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4.2.
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Capitalization
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21
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4.3.
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Subsidiaries
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21
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Page
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4.4.
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Parent
Financial Statements; Liabilities.
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21
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4.5.
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Authority
for Agreement.
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22
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4.6.
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Taxes
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22
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4.7.
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Benefit
Plans.
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23
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4.8.
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Insurance
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24
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4.9.
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Personnel.
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24
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4.10.
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Litigation
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25
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4.11.
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Environmental
Matters
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26
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4.12.
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Compliance
with Instruments; Laws; Governmental
Authorizations.
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26
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4.13.
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Banking
Relationships
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26
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4.14.
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Brokers
and Finders
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26
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4.15.
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Property
and Sufficiency
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26
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4.16.
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Disclosures
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27
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SECTION
5.
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Additional
Agreements.
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27
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5.1.
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Approvals
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27
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5.2.
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Confidentiality;
Access to Information; No Modification of Representations,
Warranties or Covenants.
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27
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5.3.
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Public
Disclosure
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27
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5.4.
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Representative
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28
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5.5.
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Regulatory
Filings; Reasonable Efforts.
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28
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5.6.
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Advise
of Changes
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29
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5.7.
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Cooperation
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29
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5.8.
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Employee
Benefit Plans
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29
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SECTION
6.
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Conditions
Precedent to the Obligations of Each Party to Effect the
Merger
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29
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6.1.
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Stockholder
Approvals
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29
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6.2.
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No
Order
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29
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6.3.
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Government
Approvals
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29
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6.4.
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Government
Litigation and Legal Requirements
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29
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SECTION
7.
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Additional
Conditions Precedent to the Obligations of Parent and Merger
Sub
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30
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7.1.
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Representations,
Warranties and Covenants.
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30
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7.2.
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No
Material Adverse Effect
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30
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7.3.
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Other
Third Party Approvals
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30
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7.4.
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Dissenting
Shares
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30
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7.5.
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Stockholder
Approval
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30
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SECTION
8.
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Conditions
Precedent to Obligations of the Company
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30
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8.1.
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Representations,
Warranties and Covenants.
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30
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8.2.
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Release
Agreement
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30
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8.3.
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Voting
and Lockup Agreement
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31
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8.4.
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Closing
Date Cash
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31
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SECTION
9.
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Closing
Deliveries.
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31
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9.1.
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Closing
Deliveries of the Company
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31
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9.2.
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Closing
Deliveries of Parent
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31
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SECTION
10.
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Survival
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32
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SECTION
11.
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Termination.
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32
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11.1.
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Termination
prior to the Effective Time of the Merger
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32
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11.2.
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Notice
of Termination; Effect of Termination
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33
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Page
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SECTION
12.
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Fees
and Expenses
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33
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SECTION
13.
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Indemnification.
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33
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13.1.
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Indemnification
of Parent Indemnified Parties
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33
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13.2.
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Certain
Limitations
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34
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13.3.
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Indemnification
by LLC Holders
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34
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13.4.
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Indemnification
of Company Indemnified Parties
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34
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SECTION
14.
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Representative.
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34
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14.1.
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Powers
of the Representative
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34
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14.2.
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Notices
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36
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14.3.
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Agreement
of the Representative
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36
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SECTION
15.
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Director
and Officer Indemnification.
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36
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SECTION
16.
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Post-Closing
Covenants.
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36
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16.1.
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Options
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36
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16.2.
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Financial
Statements
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37
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16.3.
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Delivery
of Merger Consideration
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37
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SECTION
17.
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Miscellaneous.
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37
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17.1.
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Notices
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37
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17.2.
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Successors
and Assigns
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38
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17.3.
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Interpretation
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38
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17.4.
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Counterparts
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39
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17.5.
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Facsimile
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39
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17.6.
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Severability
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39
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17.7.
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Third
Parties
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39
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17.8.
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Certain
Definitions
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39
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17.9.
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Governing
Law
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40
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17.10.
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Entire
Agreement, Not Binding Until Executed
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40
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17.11.
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Amendments;
No Waiver
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40
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17.12.
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Waiver
of Jury Trial
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40
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EXHIBITS
|
Stockholders
Written Consent
|
Exhibit
A
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Certificate
of Merger
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Exhibit
B
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Certificate
of Incorporation of Surviving Corporation
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Exhibit
C
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Parent
Pro Forma Capitalization Table
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Exhibit
D
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Form
of Warrant - Peter Engel
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Exhibit
E
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Form
of Warrant - Windstone
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Exhibit
F
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Letter
of Transmittal to Company Stockholders
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Exhibit
G
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Voting
and Lockup Agreement
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Exhibit
H
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Form
of Opinion of Company Counsel
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Exhibit
I
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Form
of Opinion of Parent Counsel
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Exhibit
J
|
AGREEMENT AND PLAN OF MERGER
THIS
AGREEMENT AND PLAN OF MERGER is made as of June 23, 2008 (this
“
Agreement ”)
by and among Insignia Solutions PLC, a corporation organized under
the laws of England and Wales (“
Parent ”),
Jeode Inc., a Delaware corporation and a wholly-owned subsidiary of
Parent (“
Merger Sub ”),
DollarDays International, Inc., a Delaware corporation (the
“
Company ”),
and the Representative (as defined below). The holders of all of
the capital stock of the Company (the “
Company Stock ”)
are collectively referred to as the “
Company Stockholders, ”
and the Company Stockholders, together with the holders of all
other equity securities of the Company, including securities
convertible into, or exercisable or exchangeable for, equity
securities of the Company (the “
Company Securities ”),
are collectively referred to herein as the “
Company Securityholders. ”
WHEREAS,
the board of directors of the Company has determined that the
merger of Merger Sub with and into the Company upon the terms
and subject to the conditions set forth herein (the
“
Merger ”)
is desirable and in the best interests of the Company and the
Company Stockholders; has approved, in accordance with applicable
provisions of the laws of the State of Delaware (“
Delaware Law ”),
this Agreement and each of the transactions contemplated hereby,
including the Merger; and has unanimously recommended that the
Company Stockholders approve this Agreement and each of the
transactions contemplated hereby, including the Merger;
and
WHEREAS,
the board of directors of Merger Sub has determined that it is
advisable and in the best interests of Merger Sub to enter
into a business combination with the Company upon the terms
and subject to the conditions set forth herein;
and
WHEREAS,
in furtherance of such combination, the board of directors of
Merger Sub, and Parent, as the sole stockholder of Merger Sub,
have approved this Agreement and the Merger, upon the terms
and subject to the conditions set forth herein, in accordance
with applicable law; and
WHEREAS,
concurrently with the execution and delivery of this
Agreement, the Company has delivered to Parent and Merger Sub
(a) a written consent of certain Company Stockholders, holding
at least 75% of the Company’s capital stock, a copy of
which is attached hereto as
Exhibit A (the
“
Stockholders Written Consent ”),
adopting this Agreement and approving the Merger in accordance with
(i) the Certificate of Incorporation of the Company, as in effect
on the date of this Agreement (the “
Charter ”,
and together with the Bylaws of the Company, as in effect on the
date of this Agreement the “
Company Organizational Documents ”),
and (ii) Delaware Law (collectively, the “
Requisite Stockholder Approval ”),
and (b) a voting agreement executed by such Company Stockholders,
holding at least 75% of the Company’s capital stock, agreeing
to vote the Parent ordinary shares issued to them (in the form of
Parent ADRs) in the Merger in favor of (a) the authorization of
90,000,000 additional ordinary shares such that the total
authorized share capital of the Parent shall be 200,000,000
ordinary shares, or such larger amount as might subsequently be
decided by the board of directors of Parent following the Effective
Time of the Merger, and (b) the election of the Parent Director and
the Independent Director to the board of directors of Parent for at
least two years following the Effective Time.
NOW,
THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be
legally bound hereby, the parties hereby agree as
follows:
SECTION
1.
The Merger.
1.1.
The Merger
. At
the Effective Time (as defined below), and subject to and upon the
terms and conditions of this Agreement and the applicable
provisions of Delaware Law, Merger Sub shall be merged with and
into the Company, the separate corporate existence of Merger Sub
shall cease, and the Company shall continue as the surviving
corporation. The Company as the surviving corporation after the
Merger is hereinafter sometimes referred to as the “
Surviving Corporation. ”
1.2.
Effective Time; Closing
. The
closing of the transactions contemplated by this Agreement (the
“
Closing ”)
shall take place on June 23, 2008 or not later than the second
(2nd) Business Day after the satisfaction or waiver of each of the
conditions set forth in Sections 6, 7 and 8 below (other than
conditions that by their nature are to be satisfied at Closing, but
subject to the satisfaction or waiver of those conditions at such
time) or at such other time as Parent and the Company shall agree
(the “
Closing Date ”).
In connection with the Closing, the parties shall cause the Merger
to be consummated by filing a certificate of merger with the
Secretary of State of the State of Delaware, as contemplated by the
General Corporation Law of the State of Delaware (the
“
DGCL ”),
and in the form attached hereto as
Exhibit B (the
“
Certificate of Merger ”)
and make all other filings or recordings required by Delaware Law
in connection with the Merger. The Merger shall be effective upon
the date and time of the filing of the Certificate of Merger with
the Secretary of State of the State of Delaware (the “
Effective Time ”).
The Closing shall take place at 10:00 a.m., Pacific Time, on the
Closing Date at the offices of Fenwick & West LLP, 555
California St., San Francisco, California 94104.
1.3.
Effect of the Merger
. At
the Effective Time, the effect of the Merger shall be as provided
in this Agreement, the Certificate of Merger and the applicable
provisions of Delaware Law, including Section 259 of the DGCL.
Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time all the property, rights,
privileges, powers and franchises of the Company and Merger Sub
shall vest in the Surviving Corporation, and all debts, liabilities
and duties of the Company and Merger Sub shall become the debts,
liabilities and duties of the Surviving Corporation.
1.4.
Certificate of Incorporation; Bylaws; Corporate
Records.
(a)
Charter and Bylaws of Merger Sub .
The Company and Merger Sub shall take all necessary actions to
cause the form of the Certificate of Incorporation as attached
hereto as
Exhibit C and
bylaws of the Company as in effect immediately prior to the
Effective Time to become the Certificate of Incorporation and
bylaws of the Surviving Corporation from and after the Effective
Time until thereafter changed or amended as provided therein or by
applicable Law. The name of the Surviving Corporation shall be
DollarDays International, Inc.
(b)
Corporate Records .
At the Closing, the Company shall deliver or cause to be delivered
to Parent possession of the minute books, stock record books and,
to the extent requested by Parent, all other documents, books,
records, agreements and financial data, of the
Company.
1.5.
Directors and Officers
. The
board of directors of the Parent immediately after the Effective
Time shall comprise of five (5) members, each to hold office in
accordance with the Certificate of Incorporation and Bylaws of the
Surviving Corporation. One board member (the “Parent
Director”) shall be appointed by the current members of the
Parent board of directors, one independent board member will be
appointed with the approval of both the Parent Director and Peter
Engel, and three board members shall be appointed by the
Representative on behalf of the Company Stockholders. Parent agrees
to take such actions as are available to it to cause the Parent
Directors to continue to be nominated to the board of directors of
Parent for at least two years following the Effective Time. The
designated officers of Merger Sub immediately prior to the
Effective Time shall be the initial officers of the Surviving
Corporation, in each case until their respective successors are
duly elected or appointed and qualified, or their earlier death,
resignation or removal.
1.6.
Appointment of Representative; Agreements Binding on Company
Securityholders
. Each
Company Stockholder that does not perfect his or its appraisal
rights under the DGCL will, as a specific term of the Merger, be
deemed to (a) have irrevocably constituted and appointed, effective
as of the Effective Time, Peter Engel (together with its permitted
successors, the “
Representative ”),
as its true and lawful agent, proxy and attorney-in-fact, to
exercise all or any of the powers, authority and discretion
conferred on him or her under this Agreement (including, without
limitation, Section 13 and Section 14), and (b) to have irrevocably
agreed to, and be bound by and comply with, all of the obligations
of the Company Stockholders set forth herein (including, without
limitation, Section 13 and Section 14). The Representative agrees
to act as, and to undertake the duties and responsibilities of,
such agent and attorney-in-fact as set forth in Section 13 and
Section 14. This power of attorney is coupled with an interest and
is irrevocable.
SECTION
2.
Definitions; Conversion and Exchange of
Securities.
2.1.
Certain Definitions
. For
purposes of this Agreement, the following terms shall have the
following meanings:
“
Balance Sheet ”
shall mean the balance sheet of DDI LLC as of May 31, 2008 and
included in the Financial Statements.
“
Closing Date Cash ”
shall mean the amount of cash plus any account receivables
(excluding the amount contemplated by the Release Agreement) minus
any account payables, held by the Parent on the Closing Date, as
disclosed in
Schedule 4.6(a) hereto.
“
Code ”
shall mean the Internal Revenue Code of 1986, as
amended.
“
Company Common Stock ”
shall mean the common stock, par value $.001 per share, of the
Company.
“
Company Preferred Stock ”
shall mean the preferred stock, par value $.001 per share, of the
Company.
“
Indebtedness ”
shall include all liabilities and obligations, including any
applicable penalties (including with respect to any prepayment
thereof), interest and premiums, (i) for borrowed money, (ii)
evidenced by notes, bonds, debentures or similar instruments, (iii)
under leases required to be capitalized in accordance with GAAP,
(iv) with respect to letters of credit but only to the extent
actually drawn on or prior to Closing, (v) in the nature of
guarantees of the obligations described in clauses (i) through (iv)
above of any other Person, or (vi) in the nature of obligations of
the type referred to in clauses (i) through (v) of any other Person
secured by any Security Interest on any asset of the Parent
Parties.
“
Lien ”
shall mean any lien (including liens for Taxes), pledge, mortgage,
deed of trust, security interest, claim, lease license, charge,
option, right of first refusal, easement, restriction, reservation,
servitude, proxy, voting trust or agreement, transfer restriction
under any stockholder or similar agreement, or encumbrance of any
nature whatsoever.
“
Merger Consideration ”
shall mean 73,333,333 Parent ADRs as described on
Exhibit D ,
provided that (a) in the event that Parent shall be required to
make any payment prior to the Final Delivery Date (as defined in
Section 2.2(a) pursuant to any of the liabilities disclosed on
Section 4.4(c) of the Parent Disclosure Schedule under the heading
“Contingent Liabilities”, the Merger Consideration will
be increased by a number of Parent ADRs equal to the product of .15
multiplied by the amount of such payment, provided that such
payment shall have been approved by the Board of the Parent (such
approval to include the approval of Vincent Pino) (such approval
not to unreasonably withheld), and provided further than no such
increase shall be effected unless and until the amount of such
payments equals or exceeds $250,000, but in the event that such
payments do equal or exceed $250,000, then such an increase shall
be effected for the entire amount of such payments (i.e., from
“dollar one”), and (b) in the event that Parent
recovers any cash prior to the Final Delivery Date as a result of
any claim held by it immediately prior to the Effective Time, or is
not required to make all or any part of any payment disclosed on
Section 4.4(c) of the Parent Disclosure Schedule under the heading
“Non-Contingent Liabilities”, the Merger Consideration
will be reduced by a number of Parent ADRs equal to the product of
.15 multiplied by the amount of cash received, or payment not
required to be made.
“
Option ”
shall mean any option to acquire shares of Company Common Stock,
including options granted under the Option Plan.
“
Option Plans ”
shall mean the Company’s current option plan, as may be
amended from time to time, and any other plan or arrangement under
which the Company or DDI LLC may have outstanding or may grant
equity-based awards.
“
Parent ADRs ”
shall mean the American Depository Receipts of the Parent issuable
by The Bank of New York pursuant to that certain Deposit Agreement
by and between Parent and The Bank of New York.
“
Parent Option Plan ”
shall mean the Parent’s 1995 Incentive Stock Option Plan for
U.S. Employees, and any other plan or arrangement under which the
Parent may grant equity-based awards.
“
Parent Stockholders ”
shall mean the holders of all of the capital stock of the Parent
immediately prior to the Effective Time.
“
Per Share Common Consideration ”
shall mean a number of Parent ADRs equal to (a) 73,333,333 divided
by (b) the total number of outstanding shares of capital stock of
the Company immediately prior to Closing.
“
Person ”
shall mean a person, firm, entity, partnership, association or any
business organization thereof.
“
Securities Act ”
shall mean the Securities Act of 1933, as amended.
“
Subsidiary ”
shall mean any corporation or other organization, whether
incorporated or unincorporated, of which (a) at least a majority of
the securities or other interests having by their terms ordinary
voting power to elect a majority of the board of directors or
others performing similar functions with respect to such
corporation or other organization is directly or indirectly owned
or controlled by the Company or by any one or more of the
Subsidiaries or (b) the Company is a general partner (excluding any
such partnership where the Company does not have a majority of the
voting interest in such partnership).
“
Warrants ”
shall mean warrants to acquire shares of the Company Common
Stock.
2.2.
Effect on Capital Stock
. At
the Effective Time and upon the terms and subject to the conditions
of this Agreement, by virtue of the Merger and without any action
on the part of Parent, Merger Sub, the Company or any Company
Securityholder:
(a)
Conversion of Securities .
(i)
Except
as otherwise provided in Section 2.2(b) each share of Company
Stock (other than any Dissenting Shares (as defined in Section
2.3(a)), issued and outstanding at the Effective Time shall be
converted into the right to receive the Per Share Common
Consideration, without interest, upon the surrender of the
certificate representing such share in accordance with the
terms hereof and in the manner provided herein. Parent shall
take all such actions as may be necessary to authorize and
deliver 46,978,375 Parent ADRs of the Merger Consideration
within ninety (90) days of the Effective Time. Pursuant to
Section 16.3, Parent shall take all such actions, including
obtaining such approval of the Parent shareholders as may be
required to increase the authorized share capital of Parent
(the “
Parent Shareholder Approval ”)
as may be necessary to authorize and deliver all of the remaining
Merger Consideration as soon as reasonably practicable after the
amendment and restatement of its Certificate of Incorporation or
the equivalent, but in no event later than the later of October 15,
2008 and (b) the date 90 days after the Company shall have
obtained, prepared and filed with the Securities and Exchange
Commission all information and financial statements relating to the
Company that may be required by the SEC or otherwise in connection
with the Parent Shareholder Approval (the date of the actual
delivery of the remaining Merger Consideration being referred to as
the “
Final Delivery Date ”).
All of the Merger Consideration shall be issued to DollarDays
International, LLC (“
DDI LLC ”)
or, if and when DDI LLC may distribute the Merger Consideration
received by it to its members, to such members in proportion to
their relative ownership of DDI LLC.
(ii)
From
and after the Effective Time, each such converted share of
Company Stock shall no longer be outstanding and shall be
automatically cancelled and retired and shall cease to exist,
and each holder of a certificate formerly representing each
such share shall cease to have any rights with respect
thereto, except the right to receive (subject to the terms of
this Agreement) the portion of the consideration specified in
Section 2.2(a)(i) payable with respect to such Company Stock,
without interest, upon the surrender of such certificate in
accordance with the terms hereof and in the manner provided
herein, or, if such share of Company Stock is a Dissenting
Share, the right, if any, to receive payment from the
Surviving Corporation of the “
fair value ”
or “
fair market value ”
of such Dissenting Share as determined in accordance with the
applicable provisions of the DGCL.
(b)
Cancellation .
Each share of Company Stock owned by the Company as treasury stock
or owned by Parent, Merger Sub or any direct or indirect wholly
owned subsidiary of Parent immediately prior to the Effective Time
shall, by virtue of the Merger and without any action on the part
of the holder thereof, cease to be outstanding, be canceled and
retired without payment of any consideration therefor and cease to
exist.
(c)
Capital Stock of Merger Sub .
Each share of common stock of Merger Sub issued and outstanding
immediately prior to the Effective Time shall be converted into and
become, and shall represent, one fully paid and nonassessable share
of common stock of the Surviving Corporation with the same rights,
powers and privileges as the shares so converted and shall
constitute the only outstanding shares of capital stock of the
Surviving Corporation.
2.3.
Dissenting Holders.
(a)
Notwithstanding
anything in this Agreement to the contrary, any shares of
Company Stock outstanding immediately prior to the Effective
Time eligible under the DGCL to exercise appraisal or
dissenters’ rights and held by a holder who has not
voted in favor of the Agreement and the Merger or consented
thereto in writing and who has exercised and perfected
appraisal or dissenters’ rights for such shares in
accordance with Section 262 of the DGCL and has not
effectively withdrawn or lost such appraisal or
dissenters’ rights (collectively, the “
Dissenting Shares ”)
shall not be converted into or represent the right to consideration
for Company Stock set forth in Section 2.2(a), and the holder or
holders of such shares shall be entitled only to such rights as may
be granted to such holder or holders in Section 262 of the
DGCL.
(b)
Notwithstanding
the provisions of Section 2.3(a), if any holder of Dissenting
Shares shall effectively withdraw or lose (through failure to
perfect or otherwise) such holder’s appraisal rights and
dissenters’ rights under Section 262 of the DGCL, then,
as of the later of the Effective Time and the occurrence of
such event, such holder’s shares shall automatically be
converted into and represent only the right to receive the
consideration for such shares set forth in Section 2.2(a)(i),
without interest.
(c)
Prior
to Effective Time, the Company shall (i) comply with the
requirements of Section 262 of the DGCL, (ii) give Parent
prompt notice of any written demand received by the Company
pursuant to Section 262 of the DGCL, and of withdrawals of
such demands, and provide copies of any documents or
instruments served pursuant to the DGCL and received by the
Company and (iii) give Parent the opportunity to participate
in all negotiations and proceedings with respect to any such
demands. Prior to the Effective Time of the Merger, the
Company shall not make any payment or settlement offer with
respect to any such demand unless Parent shall have consented
in writing to such payment or settlement offer.
2.4.
Options and Warrants
. The
Company and the Parent shall take all necessary steps to ensure
that as soon as practicable after Closing:
(a)
Each
Option outstanding and unexercised immediately prior to the
Effective Time, will be deemed cancelled as of the Effective
Time. Upon (and not before, or more than one week after) the
date of the Parent Shareholder Approval, Parent shall issue to
each person who immediately prior to the Effective Time was
the holder of an outstanding Option, an option to purchase
Parent ADRs which will be exercisable (or will become
exercisable in accordance with its terms) for that number of
whole Parent ADRs equal to the product of the number of shares
of Common Stock that were issuable upon exercise of such
Option immediately prior to the Effective Time multiplied by
the Per Share Common Consideration (with each fractional share
being rounded down to the nearest whole share) at an exercise
price equal to the greater of (x) the fair market value
of the Parent ADRs covered by the option as of the grant date
or (y) the quotient determined by dividing the exercise price
per share of Common Stock at which such Option was exercisable
immediately prior to the Effective Time by the Per Share
Common Consideration (rounded up to the nearest whole
cent).
(b)
Parent
shall take all such actions as may be necessary to authorize
and deliver 4,921,791 Parent ADRs, at a price of $0.13 per
Parent ADR within ninety (90) days of the Effective Time to
Amorin or its affiliates. Pursuant to Section 16.3, Parent
shall take all such actions, including obtaining Parent
Shareholder Approval as may be necessary to authorize and
deliver an additional 2,761,135 Parent ADRs, at a price of
$0.13 per Parent ADR, as soon as reasonably practicable after
the amendment and restatement of its Certificate of
Incorporation or the equivalent, but in no event later than
the later of (a) October 15, 2008 and (b) the date 90 days
after the Company shall have obtained, prepared and filed with
the Securities and Exchange Commission all information and
financial statements relating to the Company that may be
required by the SEC or otherwise in connection with the Parent
Shareholder Approval. Receipt of such additional Parent ADRs
by Amorin or its affiliates shall be (i) in full satisfaction
of a note payable for the amount of $450,000 from the Company
payable to Amorin or its affiliates and an additional
investment of $550,000 in the Company, and (ii) subject to and
conditioned upon the execution by Amorin of an acknowledgment
that upon receipt of such ADRs, Amorin and its affiliates will
have received full payment of all amounts owing to it by the
Company or DDI LLC.
(c)
Peter
Engel shall receive a warrant to purchase 8,551,450 Parent
ADRs at a price of $0.01 per Parent ADR in the form set forth
in
Exhibit E.
(d)
Windstone
Capital Partners shall receive a warrant to purchase 3,603,876
Parent ADRs, at a price of $0.13 per Parent ADR in the form
set forth in
Exhibit F .
2.5.
Surrender of Certificates.
(a)
Surrender Procedures .
(i)
As
soon as reasonably practicable after the Effective Time, but
no later than five (5) Business Days thereafter, Parent shall
instruct The Bank of New York (the “
Bank ”)
to mail to each Company Stockholder as of the Effective Time (i) a
letter of transmittal in substantially the form attached as
Exhibit G hereto
and (ii) instructions for use in effecting the surrender of
certificate(s) representing all of the shares of Company Stock held
by such Company Stockholder in exchange for the Merger
Consideration. The payment of the Merger Consideration with respect
to each such certificate is conditioned upon (A) the execution and
delivery of such transmittal letter and (B) the delivery of such
certificates related thereto. As soon as practicable after receipt
by the Bank of such certificate(s), properly endorsed or otherwise
in proper form for transfer, for cancellation, together with such
duly executed letter of transmittal, the Bank shall, in exchange
therefor, pay to such Company Stockholder the Merger Consideration
payable in respect of the shares of Company Stock formerly
represented by the certificate(s) surrendered, but without
interest, and the certificate(s) so surrendered shall forthwith be
canceled. If payment of any portion of the applicable Merger
Consideration is to be made to a person other than the Person in
whose name the surrendered certificate(s) are registered, it shall
be a condition of payment that the Person requesting such payment
(i) shall have paid any transfer and other Taxes required by reason
of the payment of those amounts to a Person other than the
registered holder of the certificate(s) surrendered, and shall have
established to the satisfaction of Parent that such Tax has been
paid, or (ii) shall have established to the satisfaction of Parent
that such Tax is not applicable. From and after the Effective Time,
until surrendered as contemplated by this Section 2.5(a), each
certificate formerly representing shares of Company Stock shall be
deemed to represent for all purposes only the right to receive the
applicable consideration as provided pursuant to Section 2.2(a)
hereof, if any, in respect of such shares of Company Stock formerly
represented thereby in accordance with the terms hereof and in the
manner provided herein.
(b)
Transfer Books; No Further Ownership Rights in the
Shares .
At the Effective Time, the stock transfer books of the Company
shall be closed, and thereafter there shall be no further
registration of transfers of the shares of Company Stock on the
records of the Company. From and after the Effective Time, the
holders of certificates formerly evidencing ownership of the shares
of Company Stock outstanding immediately prior to the Effective
Time shall cease to have any rights with respect to such shares,
except as otherwise provided for herein or by applicable Legal
Requirements. Parent shall cause the Surviving Corporation or the
Bank to cancel and exchange, as provided in this Section 2, any
presented certificate representing shares of Company Stock
outstanding immediately prior to the Effective Time.
(c)
Lost, Stolen or Destroyed Certificates .
In the event any certificate(s) which formerly represented shares
of Company Common Stock shall have been lost, stolen or destroyed,
upon the making and delivery of an affidavit of that fact by the
Company Stockholder thereof in form reasonably satisfactory to
Parent. Parent shall instruct the Bank to pay such Company
Stockholder the Merger Consideration which such Company Stockholder
is entitled to receive pursuant to Section 2.2(a)
hereof.
(d)
Dissenting Shares .
The provisions of this Section 2.5 shall also apply to Dissenting
Shares that lose their status as such, except that the obligations
of Parent under this Section 2.5 shall commence on the date of loss
of such status and the holder of such shares shall be entitled to
receive in exchange for such shares the applicable amounts provided
in Section 2.
2.6.
Further Action
. If,
at any time after the Effective Time, any further action is
necessary or desirable to vest the Surviving Corporation with full
right, title and possession to all assets, property, rights,
privileges, powers and franchises of the Company and Merger Sub,
the officers and directors of the Company and Merger Sub
immediately prior to the Effective Time are and will remain fully
authorized in the name of the Company and Merger Sub or otherwise
to take, and shall take, all such action. The rights of holders of
existing options and warrants of Parent shall not be impaired in
any respect by any insufficiency in the authorized and unissued
share capital of Parent that may result from the transactions
provided for in this Agreement or any subsequent issuance by Parent
of ordinary shares or Parent ADRs, or rights to acquire ordinary
shares or Parent ADRs.
2.7.
Legends
. The
certificates evidencing the Merger Consideration will bear the
legends set forth below:
“THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER
THE SECURITIES LAWS OF ANY OTHER JURISDICTIONS. THESE
SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND
RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS
PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES
LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. THE
ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL
IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT
THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE
ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
THE
SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER AS SET FORTH IN A VOTING AGREEMENT
DATED AS OF JUNE 23, 2008 BY AND BETWEEN THE ISSUER AND THE
ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH MAY BE
OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER. ANY TRANSFER
HEREOF IN VIOLATION OF SUCH TRANSFER RESTRICTIONS IS
VOID.”
SECTION
3.
Representations and Warranties of the Company
. The
Company represents and warrants to Parent and Merger Sub that the
statements in this Section 3 are true, complete and correct as of
the date hereof (unless the particular statement speaks expressly
as of another date, in which case it is true, complete and correct
as of such other date), subject, in any case, to the exceptions
provided in the Disclosure Schedule. Any exception or qualification
set forth in the Disclosure Schedule with respect to a particular
representation and warranty shall be deemed to be an exception or
qualification with respect to any other applicable representations
and warranties to which such exception or qualification is
reasonably apparent on its face to be applicable, whether or not
such exception or qualification is so numbered.
3.1.
Organization and Standing.
(a)
The
Company is a corporation duly organized, validly existing and
in good standing under the laws of its jurisdiction of
incorporation and has full corporate power and authority to
conduct its business as currently conducted and as proposed to
be conducted by it. The Company is duly qualified to do
business as a foreign corporation and is in good standing in
every jurisdiction where the properties, owned, leased or
operated, or the business conducted by it requires such
qualification, except for such failures to be so duly
qualified and in good standing that would not, individually or
in the aggregate, have a Material Adverse Effect. The term
“
Material Adverse Effect ”
as used in this Agreement shall mean any change in or effect on the
Company that, individually or in the aggregate, with all changes in
or effects on the Company, is or would reasonably be expected to
have a materially adverse effect on (i) the business, results of
operations, or financial condition of the Company, taken as a
whole, or (ii) the Company’s ability to timely consummate the
Merger in accordance with the terms of this Agreement.
(b)
Prior
to the date of this Agreement, the Company has furnished to
Parent complete and correct copies of the Charter and the
Bylaws of the Company as currently in effect. The Charter and
Bylaws are in full force and effect and the Company is not in
violation of any provision of its Charter or Bylaws.
Schedule 3.1(b) attached
hereto lists the directors and officers of the Company as of the
date hereof. Except as provided in
Schedule 3.1(b) attached
hereto, the operations now being conducted by the Company are not
now and have never been conducted by the Company under any other
name.
3.2.
Capitalization and Ownership of Shares
. All
of the capital stock of the Company is held by DDI LLC.
Schedule 3.2 attached
hereto sets out a list of the members of DDI LLC, and holders of
warrants and convertible securities of DDI LLC, in a capitalization
table of DDI LLC. The authorized capital stock of the Company
consists of 18,000 shares of Company Common Stock, of which on the
date hereof 4,451 shares are issued and outstanding on a fully
diluted basis, including 348 shares reserved for exercise of
options, and 2,000 shares of Company Preferred Stock of which on
the date hereof no shares are issued and outstanding. All of the
issued and outstanding shares of Company Stock have been, duly
authorized, validly issued, fully paid and non-assessable. No
subscription, Warrant, option, convertible security or other right
(contingent or otherwise) to purchase or acquire any shares of
capital stock of the Company is outstanding, or will be outstanding
as of the Effective Time. From and after the Effective Time, no
holder of any Option or Warrant will have the right to any
consideration with respect thereto, except as expressly provided in
Section 2.4 of this Agreement with respect to Options. The Company
does not have any obligation (whether written, oral, contingent or
otherwise) to issue any subscription, warrant, option, convertible
security or other such right or to issue or distribute to holders
of any shares of its capital stock any evidences of indebtedness or
assets of the Company. The Company does not have any obligation
(whether written, oral, contingent or otherwise) to purchase,
redeem or otherwise acquire any shares of its capital stock or any
interest therein or to pay any dividend or make any other
distribution in respect thereof. There are no outstanding or
authorized stock appreciation, phantom stock, or similar rights
with respect to the Company. All of the issued and outstanding
shares of capital stock of the Company have been offered, issued
and sold by the Company without violation of United States federal,
state, municipal or local or foreign order, judgment, writ,
injunction, decree, law, statute, standard ordinance, code,
resolution, promulgation, rule, regulation or any similar provision
having the force or effect of law (collectively, “
Legal Requirements ”)
applicable to the Company’s offer, issuance and sale of such
securities.
3.3.
Subsidiaries
. Except
as set out in
Schedule 3.3 attached
hereto, the Company does not have any Subsidiaries, and the Company
does not own or control, directly or indirectly, any equity or
similar interest in, or any interest convertible into or
exchangeable or exercisable for any equity or similar interest in,
or have any commitment or obligation to invest in, purchase any
securities or obligations of, fund, guarantee, contribute or
maintain the capital of or otherwise financially support any
corporation, partnership, joint venture or other business
association or entity. Each former Subsidiary that is no longer in
existence has been duly dissolved in accordance with its charter
documents and the laws of the jurisdiction of its incorporation or
organization and there are no outstanding liabilities or
obligations (outstanding, contingent or otherwise), including
Taxes, with respect to any such entity.
3.4.
Authority for Agreement.
(a)
The
Company has all necessary corporate power and authority to
execute and deliver this Agreement and each instrument
required hereby to be executed and delivered by the Company at
the Closing and to perform its obligations hereunder and
thereunder and to consummate the transactions contemplated
hereby and thereby. The execution, delivery and performance by
the Company of this Agreement and each instrument required
hereby to be executed and delivered by the Company at the
Closing and the consummation by the Company of the
transactions contemplated hereby and thereby have been duly
and validly authorized by all necessary corporate action; and
no other corporate proceedings on the part of the Company are
necessary to authorize this Agreement or any instrument
required hereby to be executed and delivered by the Company at
the Closing or to consummate the Merger. The board of
directors of the Company duly declared that the Merger is
advisable as required by Section 251 of the DGCL, and has
unanimously approved and adopted this Agreement and the
Merger. None of such actions by the board of directors of the
Company has been amended, rescinded or modified. This
Agreement has been, and each instrument required hereby to be
executed and delivered by the Company at the Closing will be,
duly and validly executed and delivered by the Company and,
assuming the due authorization, execution and delivery by
Parent, Merger Sub and the Representative, constitutes a
legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms,
subject to bankruptcy, insolvency, reorganization or similar
laws of general application affecting the rights and remedies
of creditors, and to general equity principles.
(b)
Except
as set forth on
Schedule 3.4(b) attached
hereto, the execution and delivery of this Agreement by the Company
and each instrument required hereby to be executed and delivered by
the Company at the Closing, the compliance by the Company with the
provisions of this Agreement and each instrument required hereby to
be executed and delivered by the Company at the Closing and the
consummation of the transactions contemplated hereby or thereby,
will not (i) conflict with or violate the Company Organizational
Documents, (ii) conflict with, result in a breach of, constitute
(with or without due notice or lapse of time or both) a default
under, result in the acceleration of, create in any party the right
to accelerate, terminate, modify or cancel, or require any notice,
consent or waiver under, or result in the loss of any benefit to
which the Company is entitled under, any material Contract or
Permit (as defined in Section 3.19), Security Interest (as
defined below) or other interest to which the Company is a party or
by which the Company is bound or to which its assets are subject,
(iii) result in the creation or imposition of any Security Interest
upon any assets of the Company, or (iv) violate any Legal
Requirement applicable to the Company or any of its assets. For
purposes of this Agreement, “
Security Interest ”
means any mortgage, security interest, pledge, license, interest,
encumbrance, claim, charge, option, restriction on the right to
sell or dispose (and in the case of securities, vote), lien or
other adverse claim of any kind (whether arising by contract or by
operation of law and whether voluntary or
involuntary).
3.5.
Consents
. No
consent, approval, order, Permit or authorization of, or
registration, declaration or filing with, or notification to
(together, the “
Consents ”)
any United States federal, state, municipal or local or any foreign
government, or political subdivision thereof, or any multinational
organization or authority or any authority, agency or commission
entitled to exercise any administrative, executive, judicial,
legislative, police, regulatory or Taxing Authority power, or any
court or tribunal (or any department, bureau or division thereof),
or any arbitrator or arbitral body (collectively, “
Governmental Authorities ”)
or any Person is required to be obtained by the Company in
connection with the Company’s execution and delivery of this
Agreement or the Company’s consummation of the Merger or the
other transactions to be consummated at the Closing as contemplated
by this Agreement, except for (i) compliance with the applicable
requirements of the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended (the “
HSR Act ”)
and the Legal Requirements analogous to the HSR Act existing in
foreign jurisdictions (collectively, “
Foreign Merger Laws ”),
and (ii) the filing and recordation of the Certificate of Merger
with the Secretary of State of the State of Delaware.
3.6.
Financial Statements; Liabilities
(a)
Attached
hereto as
Schedule 3.6 are
the audited financial statements (including balance sheets and
statements of operations) of DDI LLC for December 31, 2006 and 2005
and the years then ended, and unaudited financial statements
(including balance sheets and statements of operations) of DDI LLC
for March 31, 2008 and December 31, 2007 and the three
and twelve months then ended, respectively (collectively, the
“
Financial Statements ”):
The Financial Statements were in each case prepared in accordance
with United States generally accepted accounting principles
(“
GAAP ”),
consistently applied throughout the periods presented without
modification of the accounting principles used in the preparation
thereof throughout the periods presented. The Financial Statements
(i) are in accordance with the books and records of the
Company, and (ii) present fairly the financial condition and
results of operations of the Company as of the dates and for the
periods indicated.
(b)
The
Company and DDI LLC each has in place a system of internal
accounting controls that is sufficient to provide reasonable
assurance regarding the reliability of the Company’s and
DDI LLC’s financial statements (including the Financial
Statements), including reasonable assurance that transactions
are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting
principles and that receipts and expenditures are being made
only in accordance with authorizations of management (such
systems and processes are herein referred to as the
“
Controls ”).
Neither the Company’s employees nor the Company’s
independent auditors have identified or made the Company aware of
any complaint, allegation, deficiency, assertion or claim, whether
written or oral, regarding the Controls or the Financial
Statements. To the Company’s Knowledge, there have been no
instances of fraud, whether or not material, that occurred during
any period covered by the Financial Statements. The Company and DDI
LLC each have in place a revenue recognition policy consistent with
GAAP.
(c)
Except
as set forth in
Schedule 3.6(c) attached
hereto, as of the date hereof and as of the Effective Time, Company
has not and at the Effective Time will not have incurred, directly
or indirectly, any Indebtedness, obligations or liabilities or
engaged in any business activities of any type or kind whatsoever
or entered into any agreements or arrangements with any Person,
except for those obligations of the Company (i) in the
ordinary course of business as reflected in the Financial
Statements; and (ii) obligations and liabilities incurred
after May 31, 2008 in the ordinary course of business. The
consummation of the Merger will not give rise to any severances,
bonuses, payment obligations or other liabilities except for legal
and accounting fees.
3.7.
Absence of Changes
. Except
as set forth on
Schedule 3.7 attached
hereto, since
December 31,
2007.
(i)
there
has been no change in the business, prospects, financial
condition or results of operations of the Company or DDI LLC
that constitutes a Material Adverse Effect;
(ii)
There
has been no change by the Company or DDI LLC in its accounting
or cash management methods, principles or practices or
revaluation by the Company or DDI LLC of any of its
assets;
(iii)
Neither
the Company nor DDI LLC has declared, set aside or paid any
dividend or other distribution in respect of any of its
capital stock; or repurchased, redeemed or otherwise acquired
any of its securities;
(iv)
Neither
the Company nor DDI LLC has sold, transferred, delivered,
leased, subleased, licensed, sublicenses, mortgaged, pledged,
encumbered, impaired or otherwise disposed of (in whole or in
part), or created, incurred, assumed or caused to be subjected
to any Lien on, any of the rights, assets or properties of the
Company or DDI LLC (including any Intellectual Property or
accounts receivable), except for the sale of inventory in the
ordinary course of business consistent with past
practice;
(v)
Neither
the Company nor DDI LLC has not acquired any rights, assets or
properties other than inventory in the ordinary course of
business consistent with past practice;
(vi)
there
has not been any damage, destruction or loss (whether or not
covered by insurance) with respect to any rights, assets or
properties of the Company or DDI LLC; and
(vii)
the
Company and DDI LLC have each conducted its business only in
the ordinary course of business consistent with past
practice.
3.8.
Taxes
.
(a)
(i)
All Tax Returns required to be filed by or on behalf of the
Company or DDI LLC have been duly and timely filed with the
appropriate Taxing Authority in all jurisdictions in which
such Tax Returns are required to be filed (after giving effect
to any valid extensions of time in which to make such
filings), and all such Tax Returns are true, complete and
correct in all material respects; and (ii) all Taxes payable
by or on behalf of the Company or DDI LLC have been fully and
timely paid. With respect to any period for which such Tax
Returns have not yet been filed or for which such Taxes are
not yet due or owing, DDI LLC has made due and sufficient
accruals for such Taxes on the Balance Sheet. All required
estimated Tax payments sufficient to avoid any underpayment
penalties or interest have been made by or on behalf of the
Company or DDI LLC.
(b)
For
purposes of this Agreement:
“
Tax ”
or “
Taxes ”
means (i) all federal, state, local or foreign taxes, charges,
fees, imposts, levies or other assessments, including without
limitation all income, gross receipts, capital, sales, use, ad
valorem, value added, transfer, franchise, profits, inventory,
capital stock, license, withholding, payroll, employment, social
security, unemployment, excise, severance, stamp, occupation,
property and estimated taxes, customs duties, fees, assessments and
charges of any kind whatsoever, (ii) all interest, penalties,
fines, additions to Tax or additional amounts imposed by any Taxing
Authority in connection with any item described in clause (i) and
(iii) any liability in respect of any items described in clauses
(i) or (ii) payable by reason of any Contract, assumption,
transferee liability, operation of law, Treasury Regulation Section
1.1502 6 (or any predecessor or successor thereof of any analogous
or similar provision of Tax Law) or otherwise.
“
Taxing Authority ”
means the IRS or any other governmental body (whether state, local
or foreign) responsible for the administration of any
Tax.
“
Tax Law ”
means any Legal Requirement (whether domestic or foreign) relating
to Taxes.
“
Tax Return ”
means any return, report or statement required to be filed with
respect to any Tax (including any elections, declarations,
schedules or attachments thereto, and any amendment thereof)
including any information return, estimate, claim for refund,
amended return or declaration of estimated Tax, and including,
where permitted or required, affiliated, combined, consolidated or
unitary returns for any group of entities that includes the Company
or DDI LLC.
3.9.
Property and Sufficiency.
(a)
The
Company has good and marketable title to, or, in the case of
leases of properties and assets, a valid leasehold interest
in, or otherwise has a valid legal right to use, all of the
properties and assets (whether real, personal, tangible or
intangible) (i) reflected on the Balance Sheet (other
than assets sold since the date of the Balance Sheet) or
acquired thereafter and (ii) necessary to conduct all of the
business and operations of the Company as currently conducted,
and none of such properties or assets is subject to any Liens
or Security Interest, other than those described in
Schedule 3.9(a) attached
hereto. The Company does not own any real property.
(b)
The
properties, assets and contract rights of the Company
constitute all of the properties and assets owned by DDI LLC
prior to the Effective Time (and prior to the execution and
delivery of the Contribution Agreement dated the date hereof
between the Company and DDI LLC (the “
Contribution Agreement ”).
The Contribution Agreement has been duly authorized, executed and
delivered by the Company and DDI LLC, and, at or prior to the
Effective Time of the Merger, all of the properties, assets of DDI
LLC will have been contributed to the Company pursuant to the
Contribution Agreement. The properties and assets contributed to
the Company by DDI LLC at or prior to the Effective Time pursuant
to the Contribution Agreement constitute all of the assets and
properties necessary to conduct all of the business and operations
of DDI LLC as conducted immediately prior to the date
hereof.
(c)
Each
of the leases for real property of the Company is identified
in
Schedule 3.9(b) attached
hereto (“
Real Property Leases ”).
(d)
Neither
the Company nor DDI LLC have transferred or assigned any
interest in any Real Property Lease, nor has the Company or
DDI LLC subleased or otherwise granted rights of use or
occupancy of any of the premises described therein to any
Person. The facilities subject to a Real Property Lease (each
a “
Leased Premises ”)
and the personal property owned or leased by the Company are in
good operating condition and repair and free from any material
defects, reasonable wear and tear excepted, and are suitable for
the uses for which they are being used in all material
respects.
3.10.
Contracts
. Except
as disclosed in
Schedule 3.10 attached
hereto, neither the Company nor DDI LLC is a party to, subject to
or otherwise bound by:
(a)
any
Contract or series of related Contracts with the same
counterparty or its affiliates which requires, or could
reasonably be expected to require, aggregate future payments
by or to the Company or DDI LLC in excess of
$50,000;
(b)
any
Contract for the sale of any commodity, product, material,
supplies, equipment or other personal property for a sale
price in excess of $50,000, other than purchase or sale orders
entered into in the ordinary course of business consistent
with past practice;
(c)
any
distributor, reseller manufacturer’s representative,
sales representative or similar Contract under which the
Company does not have the right to terminate without penalty
on less than thirty (30) days’ notice;
(d)
any
Contract pursuant to which Intellectual Property is licensed
to or from the Company or DDI LLC other than Contracts
licensing the right to use off-the-shelf or other readily
commercially available third party software (including, but
not limited, to any click-wrap or shrink-wrap
license);
(e)
any
Contract with any current or former officer, employee or
director of the Company or DDI LLC or any
“affiliate” (as defined in the Securities Act) of
the Company or DDI LLC or such persons or, to the
Company’s Knowledge, any member of his or her immediate
family (any of the foregoing, a “
Related Party ”),
including, without limitation, any Contract providing for the
furnishing of services by, rental of real or personal property
from, or otherwise requiring payments to, or from, any Related
Party;
(f)
any
Contract under which the Company or DDI LLC is restricted from
carrying on any business or other services or competing with
any Person anywhere in the world, or restricted from
soliciting or hiring any person with respect to employment, or
which would so restrict the Company or the Surviving
Corporation after the Closing Date;
(g)
any
loan agreement, indenture, note, bond, debenture or any other
document or Contract evidencing Indebtedness or a Security
Interest to any Person or any commitment to provide any of the
foregoing, or any agreement of guaranty, indemnification or
other similar commitment with respect to the obligations or
liabilities of any other Person;
(h)
any
Contract for the disposition of any of the Company’s or
DDI LLC’s material assets or business (whether by
merger, sale of stock, sale of assets or
otherwise);
(i)
any
Contract for the acquisition of the business or capital stock
of another party (whether by merger, sale of stock, sale of
assets or otherwise);
(j)
any
Contract concerning a partnership, joint venture, joint
development or other similar arrangement with one or more
Persons;
(k)
any
Contract creating any obligation with respect to the payment
of any severance, retention, bonus or other similar payment to
any Person, one condition to the payment or acceleration of
which is the Company entering into this Agreement or the
consummation of any of the transactions contemplated hereby;
or
(l)
any
other agreement (or group of related Contracts with the same
third party) to the extent not otherwise disclosed in the
Disclosure Schedule that is material to the Company
.
Schedule 3.10(l) attached
hereto provides a form of the Company’s and DDI LLC’s
standard customer Contract and sets forth a list of the top five
customer Contracts which deviate (other than with respect to
prices, payment amounts or payment or delivery schedules) in any
material respect from the Company’s and DDI LLC’s
standard form. Each Contract to which DDI LLC was a party
immediately prior to the date hereof has validly assigned to the
Company.
Each
Contract disclosed in the Disclosure Schedule or required to
be disclosed pursuant to this Section 3.10, each Real Property
Lease and each other Contract to which the Company or DDI LLC
is a party or otherwise bound relating to any Intellectual
Property that is material to the business of the Company or
DDI LLC is a valid and binding agreement of the Company and,
to the Company's Knowledge, is in full force and effect in
accordance with its terms, and neither the Company nor, to the
Company’s Knowledge, any other party thereto is in
default or breach in any material respect under the terms of
any of the foregoing Contracts (a “
default ”
being defined for purposes hereof as an actual default or event of
default or the existence of any fact or circumstance which would,
upon receipt of notice or passage of time, constitute a default or
right of termination), nor will the consummation of the
transactions contemplated by this Agreement give rise to any such
default or breach. No party to any of the foregoing Contracts has
exercised any termination rights with respect thereto, and no party
has given notice of any significant dispute with respect to any of
the foregoing Contract. True and complete copies of each of the
Contracts described in this paragraph have been made available to
Parent.
As
used in this Agreement, a “
Contract ”
shall mean any agreement, understanding, contract, deed, mortgage,
lease, sublease, license, sublicense, instrument, commitment,
promise, undertaking or other binding arrangement, whether written
or oral.
3.11.
Benefit Plans.
(a)
For
purposes of this Agreement, the term “
Company Employee Plan ”
or “
Plan ”
means any employee benefit plan (as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended
(“
ERISA ”),
whether or not subject to ERISA), any other bonus, profit sharing,
compensation, pension, retirement, “401(k),”
“SERP,” severance, savings, deferred compensation,
fringe benefit, insurance, welfare, post-retirement health or
welfare benefit, health, life, stock option, stock purchase,
restricted stock, tuition refund, service award, company car or car
allowance, scholarship, housing or living allowances, relocation,
disability, accident, sick pay, sick leave, accrued leave,
vacation, holiday, termination, unemployment, individual
employment, consulting, executive compensation, incentive,
commission, payroll practices, retention, change in control, non
competition, other material plan, agreement, policy, trust fund or
arrangement (whether written or unwritten, insured or self-insured)
providing compensation or benefits, and any plan subject to
Sections 125, 127, 129, 137 or 423 of the Code, currently
maintained, sponsored or contributed to by the Company or DDI LLC
or any trade or business, whether or not incorporated, that
together with the Company would be deemed to be a “single
employer” within the meaning of Section 4001(b) of ERISA (an
“
ERISA Affiliate ”)
or to which the Company or DDI LLC or any ERISA Affiliate is a
party, or to which the Company or an ERISA Affiliate had, has or
will have any liability. Each Plan is in writing.
Schedule 3.11 attached
hereto includes a true and complete list of all Plans, and the
Company has provided or made available to Parent a complete copy of
each Plan (or, in the case of any unwritten Plan, descriptions of
the material terms thereof) as well as, if applicable, a copy of
each trust or other funding arrangement, each summary plan
description and summary of material modifications, and the most
recent application for determination letter submitted to the IRS
and the most recent determination letter received from the IRS. The
Company has delivered to Parent true and complete copies of all
Form 5500 Series annual reports for each Plan, together with all
schedules, attachments, and related opinions and copies of any
correspondence from or to the IRS, the Department of Labor or other
U.S. government department or agency relating to an audit or
penalty assessment with respect to any Plan or relating to
requested relief from any liability or penalty relating to any
Plan.
(b)
The
Company, DDI LLC and each ERISA Affiliate is and has been in
compliance with its obligations under the terms of each
Plan.
(c)
Each
Plan and each funding vehicle related to such Plan is
currently in compliance in all material respects with, and has
been administered and operated in compliance with, its terms
and all applicable statutes, orders, rules and regulations.
Each Plan which is intended to be a “qualified
plan” as described in Section 401(a) of the Code has
been determined by the IRS to so qualify, and there are no
facts which might adversely affect such
qualification.
(d)
Neither
the Company nor its ERISA Affiliates nor DDI LLC maintain,
sponsor or contribute to any single employer plan (as such
term is defined in Section 4001(b) of ERISA) subject to Title
IV of ERISA or any “multiemployer plan” (as such
term is defined in Section 3(37) of ERISA), nor have they
incurred any material liability, including, without
limitation, withdrawal liability, with respect to any such
Plan that remains unsatisfied.
(e)
No
Plan is funded by, associated with or related to a
“voluntary employees’ beneficiary
association” within the meaning of Section 501(c)(9) of
the Code. No Plan is or has been subject to Section 302 or
Title IV of ERISA.
(f)
The
Company and DDI LLC have made or will accrue prior to the
Closing Date all payments and contributions (including
insurance premiums) due and payable as of the Closing Date to
each Plan as required to be made under the terms of such
Plan.
(g)
With
respect to all Plans and related trusts, there are no
“prohibited transactions,” as that term is defined
in Section 406 of ERISA or Section 4975 of the Code, that have
occurred which could subject any Plan, related trust or party
dealing with any such Plan or related trust to any tax or
penalty on prohibited transactions imposed by Section 501(i)
of ERISA or Section 4975 of the Code.
(h)
There
are no actions, suits, arbitrations or claims (other than
routine claims for benefits by employees of the Company or DDI
LLC, or beneficiaries or dependents of such employees arising
in the normal course of operation of a Plan) pending, or to
the Knowledge of the Company, threatened, with respect to any
Plan or any fiduciary or sponsor of a Plan with respect to
their duties under such Plan or the assets of any trust under
any such Plan.
(i)
The
Company and DDI LLC have complied in all material respects
with the health care continuation requirements of Section 601,
et. seq. of ERISA with respect to employees and their spouses,
former spouses and dependents.
(j)
Neither
the Company nor DDI LLC has any obligations under any Plan to
provide post-retirement medical benefits to any employee or
any former employee of the Company other than statutory
liability for providing group health plan continuation
coverage under Part 6 of Title I of ERISA and Section 4980B of
the Code or applicable state law.
(k)
Neither
the negotiation or execution of this Agreement, nor the
consummation of the transactions contemplated by this
Agreement will, either alone or in combination with another
event, (i) entitle any current or former employee, officer or
consultant of the Company or DDI LLC or any ERISA Affiliate to
severance pay, unemployment compensation or any other payment
or additional rights, except as expressly provided in this
Agreement, or (ii) accelerate the time of payment or vesting,
or increase the amount of compensation (including equity
compensation) due any such employee, officer or
consultant.
(l)
Neither
the Company nor DDI LLC is a party to, or otherwise obligated
under, any contract, agreement, plan or arrangement covering
any person that, individually or collectively, could give rise
to the payment of any amount that would not be deductible by
Parent, the Company or any of their respective affiliates by
reason of Section 280G of the Code or that could be subject to
Section 4999 of the Code.
(m)
Each
Company Employee Plan which is subject to the requirements of
Section 409A of the Code has been adopted in good faith
compliance with such Section and the guidance issued by the
Department of Treasury thereunder to date. Each Option has
been granted by the Board of Directors of the Company on the
date the Board met and was granted with an exercise price
equal to no less than one hundred percent of the fair market
value per share of Company Common Stock on the date of
grant.
3.12.
Intellectual Property.
(a)
Schedule 3.12(a) attached
hereto sets forth true, complete and correct lists of the
Intellectual Property (as defined below), both U.S. and foreign,
that is owned by the Company as of the date of this Agreement,
along with the record owner of each such item of Intellectual
Property, the jurisdiction in which each such item of Intellectual
Property has been registered or filed and the applicable
registration, application or serial number or similar identifier.
All of the Intellectual Property that was owned by DDI LLC
immediately prior to the date of this Agreement has been validly
and fully contributed to the Company, and DDI LLC has not retained
any rights thereto.
(b)
Other
than (i) inbound “shrink-wrap” and similar
publicly-available commercial binary code end-user licenses
and (ii) outbound “shrink-wrap” licenses in the
form set forth on
Section 3.12(b) of
the Disclosure Schedule,
Schedule 3.12(b) attached
hereto lists all contracts, licenses and agreements to which the
Company is a party with respect to any Intellectual Property,
including all licenses of Intellectual Property granted to or by
the Company and all assignments of Intellectual Property to or by
the Company. All such contracts, licenses and agreements are in
full force and effect, and neither the Company nor DDI LLC is in
material breach of any of the foregoing contracts, licenses or
agreements and, to the Company’s Knowledge, no other party to
any such contract, license or agreement is in breach thereof or has
failed to perform thereunder. The consummation of the transactions
contemplated by this Agreement will neither violate nor result in
the breach, modification, cancellation, termination or suspension
of such contracts, licenses and agreements. Following the Closing
Date, both the Survivin
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